LONDON -- Just days after London's new mayor revealed plans to clamp down on the city's toxic smog, the Chinese owner of the London Taxi Co. raised $400 million to help it finance production of a plug-in hybrid version of its iconic cab.
Zhejiang Geely Holding Group Co., owner of the company that makes London's iconic black cabs, secured $400 million through a green bond sale. The proceeds will finance the development of the TX5, a plug-in version of the classic 1958 FX4, unveiled in October during a state visit to the UK by Chinese President Xi Jinping.
In the next two weeks, Geely will move to a new factory in Coventry, England, where it will start work on producing a prototype of the TX5, said Li. Commercial sales are set to start in the fourth quarter of 2017. That's in time for the deadline of Jan. 1, 2018, when London will require all new taxis to be zero-emission capable.
The factory will be able to produce 36,000 electric cabs a year, far exceeding the 23,000 cabs on the London's streets today. Li said the company is already in discussions with other European "mega cities" striving to curb pollution from their taxi fleets.
"This is a landmark for us, not only in the sense of the funds raised, but also the purpose," Frank Li, group chief financial officer, said in a telephone call with reporters.
A growing number of investors are seeking to place money into green bonds that fund projects that promise to accelerate the shift away from polluting energy and transport fuels to renewable and clean technology. Almost $56 billion of green bonds may be issued in 2016, topping last year's record of $46 billion, according to Bloomberg New Energy Finance.
Geely's green bond was oversubscribed by close to 6 times, according to Angie Tang, a Hong Kong-based spokeswoman at Barclays. The company has no plans to issue another in the foreseeable future, Li said.
The transaction is the first credit-enhanced green bond offering from a global auto company, according to Barclays Plc, which was a joint coordinator of the issue with Bank of China Ltd., Bank of America Merrill Lynch and Societe Generale. The bonds, maturing in 2021 have a 2.75 percent coupon, the lowest ever for dollar bonds in China's auto industry, Barclays said.